WorldExecutivesDigest|Tax Advantages in Your Small Business|Starting your own business can be an incredibly rewarding experience. It can also be a bit stressful. As a business owner, you have to file taxes (in addition to your personal taxes). Fortunately, there are several deductions that small business owners can make that can help alleviate the burden. Here are a few of the small business tax deductions you can get.
Incorporating Your Business
Unincorporated businesses can be missing out on some tax breaks. If you create an llc, you don’t have to file a corporate tax return. You simply report your share of profits and losses on your personal income tax. This helps avoid double taxation. Only the owner pays taxes, not the business.
Employee Salaries and Wages
The salaries and wages that you pay your employees, as well as any bonuses or commissions that you award, are all classified as business expenses. As such, they are tax-deductible. This also includes any freelancers or independent contractors that you use. Keep in mind, the salaries and wages that you pay partners or LLC members aren’t eligible as these individuals aren’t considered employees.
Benefits for Employees
Benefits that you provide do more than just attract employees. Health plans, life insurance, pension, education reimbursements, and child care assistance can help you to bring in loyal, valuable employees. These benefits are also all tax-deductible. You provide your employees with great benefits that they enjoy and you get to enjoy the tax breaks.
Marketing is a vital part of your business. Good marketing helps you to reach your target market and bring in new customers. While many marketing campaigns aren’t all that expensive, the costs can add up throughout the year. Your marketing efforts, such as business cards, flyers, and your website, are all tax-deductible, which can help offset the cost. The only type of marketing that isn’t tax-deductible is political advertising.
Most office supplies and expenses can be deducted from your taxes so long as they’re used within a year of being purchased and you have the receipts to prove that you bought them. Common supplies and expenses include such things as computers, fixtures, furniture, pens, paper, postage, shipping, and delivery charges. Make sure that you keep all receipts for your purchases so that you can properly deduct the costs come tax time.
Whether you run your business out of a traditional office or out of your home, your utilities are tax-deductible. This includes your electricity, phone, and others. If you work out of your home, you must have a dedicated landline for the phone to count toward your deductions.
Some businesses need to rent equipment or machinery to run properly. Any fees you pay to rent or lease equipment are fully deductible.
Interest on Loan Payments
Many businesses need to take out a loan at some point or another to make ends meet. They’re incredibly common and can be quite beneficial. Businesses often use loans for extra working capital to help run their business or if they’re trying to grow or expand their business. If you are currently making payments on a loan for your business, the interest you pay is tax-deductible
It’s not uncommon for small businesses to work with charities. Donations that you make are (for the most part) tax-deductible. While you can’t deduct the time that you spend working with a charity, you can deduct cash donations as well as donations of supplies or property. You can also only make deductions for donations made to recognized charities. Just like with many other deductions, make sure that you keep your receipts for what you donate so that you can take the appropriate deductions when you file your taxes.
Taking advantage of tax deductions for your business doesn’t just lessen your tax burden. It also helps to give you more money to keep your business running smoothly. With the additional funds, you can grow your business the way you want and achieve success.